ESPN Is More Powerful Than You Can Possibly Imagine...

Categories: Cable TV,TV Business,TV Sports Ratings & News

Written By

August 30th, 2012

Anybody interested in ESPN as a business should check out the excellent piece in BloombergBusinessweek today by Karl Taro Greenfeld.

Two things jumped out at me:

ESPN earns one out of every four dollars earned by cable stations in America.

Impressive. Most Impressive.

And it's time to adjust that ~$4/sub/month number that we typically refer to that ESPN gets from its distributors:

ESPN charges its cable affiliates an average $5.13 per month for each of its 100 million subscribers (the industry average is about 20¢ per subscriber).

 
  • joemite

    So $5 of my cable bill goes to ESPN? I don’t even watch sports. That blows.

  • http://tvbythenumbers.com Robert Seidman

    @Joemite: more than $5 of your cable bill – likely *much* more. The $5.13 is the *wholesale* rate charged to the MSOs. The MSOs charge their customers retail rates.

  • CCV

    ESPN is the Kardashian of sports, a 24-hour commercial. No reason to tune in if you want sports-related anything.

  • Matt H.

    Doesn’t the MSO get much (if not all) that money back from selling ad time on the ESPN channels?

  • http://tvbythenumbers.com Bill Gorman

    “Doesn’t the MSO get much (if not all) that money back from selling ad time on the ESPN channels?”

    Not remotely close.

    Note the ratio for ESPN’s own carriage fee to ad revenue mentioned in the piece. $7 6 billion of carriage fee revenue to $2 billion of ad revenue.

    I don’t know what the ad time split is between ESPN and the MSOs but even if it’s 50/50, the MSOs can’t be making more than ESPN’s $2 billion (and that would have costs deducted from it), and they’re paying ESPN that $7 6 billion in carriage fees directly.

    Edit: Corrected the $7b to $6b.

  • serg

    espn should be treated as a premium channel, allowing subscribers to drop it just like hbo or the nfl network.

  • jose

    It is amazing. But then I mainly use my TV for news and sports these days. And when I have the TV on in the background it’s always either ESPN or FoxNews.

  • USAmerica1st

    “The Mothership” of sports channels is amazing. Multiple 24 hr TV channels, 24 hr sports radio meshed with local sports radio shows, simulcast TV- radio shows, the ESPY awards, assisting the Jimmy V charity, live sports of all sorts, Spanish language channel, it just goes on and on. Fox, CBS, and ABC are giving it a try, but ESPN is awesome.

  • http://tvbythenumbers.com Robert Seidman

    it doesn’t change Bill’s point in the comment above at all, but currently the carriage fees earned by ESPN are ~$6 billion/year, not $7 billion, if SNL Kagan’s estimates are correct.

    The linked article notes projected revenue of $9 billion for 2013.if that’s based on the current SNL Kagan estimate’s that would be ~$6B in carriage and ~$3 billion in advertising. Regardless, however the $9B is sliced…it’s still $9 billion with a B!

  • http://tvbythenumbers.com Bill Gorman

    “it doesn’t change Bill’s point in the comment above at all, but currently the carriage fees earned by ESPN are ~$6 billion/year, not $7 billion, if SNL Kagan’s estimates are correct.”

    D’oh! Reading fail.

  • 728huey

    Calling ESPN the 800 pound gorilla in cable broadcasting would be inappropriate; it’s more like the 2-ton blue whale of cable broadcasting. FSN would be the regular-sized gorilla, NBC Sports Network the orangutan, and CBS Sports Network the chimpanzee.

  • cas127

    Actually, I think it is a very good question why ESPN isn’t treated like a premium network, with a separate (higher priced) tier.

    Moving it off the basic tier would allow a (significant) reduction in price for basic cable.

    I suppose that with something like 100 million out of 115 million households, pay TV figures it isn’t worth disrupting the historical ecosystem (ESPN and its competition-blocking, content-empty, sister networks) trying to get the last 10% to 15% of the market.

    But you *would* think one of the big 4 nationwide MSO’s might give it a shot in a bid to lure away customers (can we all say OLIGOPOLY).

    And the sloth of the MSOs (“Silence of the Scams”) also ignores the tens of millions of basic subscribers who know they are being bled by the cross-subsidy and are pissed off about it.

  • Hoovy

    cas127
    Unlike other pay for premium networks- ESPN delivers what cable and satelitte providors want- viewers. To say they dont have some quality related content is as dumb as the idiots who say there is NOTHING on T.V. nowdays. The truth is someone is watching- it may not be you, but hype doesent pay the bills. Just ask the Oprah Network. Its always about veiwers and cash… not hype

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